In the six months before an election is due, Australian politics shows lots of movement and no direction; all heat and no light. Important and difficult decisions are put on hold. In their place foolish promises are frequently made to special (and usually undeserving) minorities because they might deliver votes.
In this environment the Australian wine industry awaits the Government’s response to the Industry Commission report on wine. The chair of the commission, Bill Scales, recommended that wine tax go up from 26 per cent to 32 per cent. Admittedly it was a minority report. However, if it enough to send chilly winds through the investment climate in the industry.
The president of the Wine-makers Federation of Australia, Stephen Shelmerdine, says that the Government has had the report for three months. It is plenty of time to reply. To date the Government has only hinted that it will do nothing. That is not enough. Investors hate uncertainty.
Of course, wine is a sensitive product when it comes to tax. The extra wine tax in the 1994 Budget rose the ire of the minority parties in the Senate … particularly the Democrats who are strong in South Australia.
The wine industry has made enormous gains both in the overseas and domestic market in the past five years. Exports are booming and the indications are that Australians are moving to better and more expensive wines. It would be a pity to hit an industry on the head with greater tax just as it is becoming more successful.